In a perfectly competitive market, which two conditions must be met to achieve long-run equilibrium?
a. Productive efficiency and allocative efficiency
b. Allocative efficiency and profit maximization
c. Productive efficiency and low average costs
d. Zero economic profits and zero accounting profits
a. Productive efficiency and allocative efficiency
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When the Federal Reserve increases the federal funds rate, bank loans ________, the supply of loanable funds ________, and the real interest rate ________
A) increase; increases; falls B) decrease; decreases; rises C) increase; increases; rises D) do not change; decreases; rises E) decrease; does not change; rises
Fixed costs of entry create an advantage for potential entrants since incumbents have already made these expenditures while potential entrants can avoid these costs
Indicate whether the statement is true or false
Differences in stages of development among countries are reflected in a number of ways besides per capita income
a. True b. False
According to the simple circular flow concept, whenever planned investment is less than planned saving
a. total output and/or prices rise. b. total output and/or prices fall. c. prices fall and total output rises. d. prices rise and total output falls.